Market Pulse - August
Markets go risk-on in July
Risk-on behaviour was turned up in July with equites reversing some of its year-to-date losses, especially in the growth segment of the market. Equities generally outperformed bonds during the month. The appetite for risk assets has been prompted by market expectations that the Fed may have to be slower in its hiking cycle given already tightening financial conditions. These sentiments have been expressed in the futures market with a significant repricing since mid-June, as the market now expects that the Fed will be unable to hike rates meaningfully beyond the neutral rate.